SoLocal Group plan rejection renews creditor rights to accelerate debt

By Caroline Salls

Pittsburgh, Oct. 24 – SoLocal Group said the rejection of its financial restructuring plan by a combined general shareholders’ meeting resulted in a release of the creditors who were parties to agreements waiving their rights to accelerate the group’s debt in connection with a breach of leverage covenant.

As a result, SoLocal said in a news release that the creditors, excluding holders of tranche C1 debt, are again able to accelerate the group’s debt by a two-thirds majority, subject to the mandatory provisions of the Code de Commerce.

On Oct. 20, the creditors sent a letter to the chairman of SoLocal’s board of directors stating that the creditors were now released from their undertaking to waive their rights and that they consider the plan that was submitted to the shareholders’ meeting as the only viable solution to end the company’s financial difficulties.

SoLocal said it wants to hold new discussions with its creditors and shareholders to reach the terms of a financial restructuring.

The Commercial Court of Nanterre will consider the company’s situation under the accelerated financial safeguard plan approved in 2014 on Nov. 2. This hearing was scheduled before the shareholders’ meeting was held and was initially supposed to be a hearing on the motion to amend the plan.

Change-of-control clarified

In addition, SoLocal clarified the change-of-control clause related to the senior secured notes issued in 2011 by PagesJaunes Finance & Co. SCA following various questions raised by shareholders after the general meeting.

Specifically, under the terms of the notes, a change of control will occur upon the sale of all or substantially all of SoLocal Group’s assets, the adoption of a liquidation plan for the group, when one or more persons acting in concert becomes the beneficial owner of more than 50% of the voting rights of SoLocal Group or upon the replacement of the majority of members of the SoLocal Group’s board of directors by new members who have not been elected or approved by the board, which is assessed on a 24-month rolling period.

In the event of a change of control, PagesJaunes Finance must offer to noteholders to repurchase their notes at a price equal to 101% of the nominal value, and the proportionate share of the C1 loan granted to SoLocal by PagesJaunes equal to 101% of the face amount of the notes whose redemption is requested by the noteholders becomes due and payable, with a maximum payment of 101% of €350 million.

SoLocal said the changes in the governance of the company decided on Oct. 19 do not constitute a change of control.

In connection with tranches A7 and B3 of SoLocal’s debt, a change of control occurs if a person or group of persons acting in concert acquires control of the company as a result of the acquisition of the company’s shares. Thus, for these two tranches, SoLocal said the change in the board composition is not in itself a change of control that may lead to the acceleration of these debt tranches.

SoLocal is a Boulogne-Billancourt, France, online communications company.

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